Royal Phillips Electronics
) announced that it will be initiating the process to integrate its
Lumileds (LED components) and Automotive lighting businesses into a
stand-alone company within the Philips Group. The process is
scheduled to be completed by the second-quarter of 2015. The
company expects the setup cost of about €30 million ($40.2 million)
to be incurred in the second half of 2014.
This restructuring is a strategic move by the company to attract
investment into the business for driving further growth in LED
luminaries, LED lamps and LED lighting systems and services. The
business will cater to both professional and consumer markets.
In 2013, the two businesses jointly contributed about €1.4
billion ($1.9 billion) to the company's revenues. The strong
performance of Lumileds and Automotive lighting businesses coupled
with the immense scope for scaling growth is likely to form a
lucrative investment opportunity for third-party investors.
The combination of the two businesses will also benefit
customers by providing them with more extensive digital lighting
components solutions while integrating the research and development
(R&D) and supply chains efficiently, especially for automotive
Philips Lighting will continue to collaborate with this
stand-alone facility for innovation as a customer and a
shareholder. This will serve the company's long-term aims as well.
Since 2013, the company has been restructuring its portfolio to
position itself better as a focused company in the lighting,
healthcare and lifestyle markets. The company has also been
implementing a comprehensive performance improvement and change
program called Accelerate to realize the value potential and speed
Phillips currently has a Zacks Rank #3 (Hold). Some
better-ranked stocks in the sector include
Universal Electronics Inc.
). While Universal Electronics sports a Zacks Rank #1 (Strong Buy),
Garmin and GigOptix carry a Zacks Rank #2 (Buy).
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